SFF market fragmentation continues, x86 and ARM set to square off

Analysts offer insight on the financials of the merchant board market.

The trend across vertical industries towards smaller and more efficient electronics is driving growth in Small Form Factor (SFF) boards, with new specifications and revisions emerging every year. In particular, a number of Computer-On-Module (COM) form factors have recently entered the merchant board space, with the likes of Qseven and the Smart Mobility Architecture (SMARC) looking to take advantage of surges in mobile connectivity, for example. However, while the addition of new players has contributed to the penetration of SFFs in certain applications, it has also made it difficult for any one standard to establish clear command of the market. As Eric Gulliksen, Senior Analyst at VDC Research in Natick, MA (www.vdcresearch.com) explains, the result has been increased segmentation during a period of “moderately healthy growth” for SFF boards (Figure 1).

Figure 1: Moderately healthy growth in the Small Form Factor (SFF) board industry between 2012 and 2017 will be fragmented between a growing number of SFF standards. Graphic courtesy of VDC Research (www.vdcresearch.com).

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“We don’t have the system numbers yet, but on the board side we’re showing an overall Compound Annual Growth Rate (CAGR) in excess of 5 percent,” Gulliksen says. “You’ve got a whole variety of form factor classes within SFFs. You’ve got what basically is the embedded motherboard – the EPICs and so forth; you’ve got COMs; you’ve got the PC/104 family. Some of them are doing well, some of them not so hot.”

“Two-to-three years ago or maybe even four, [COMs] became a mainstream technology,” he continues. “That having been said, [there is a] plethora of form factors that people keep tossing out – every company comes out with a new form factor, tries to make it a standard, and they all throw them against the wall to see if any of them stick. What ends up happening is you have such a fragmentation that it’s slowing down the growth of COMs in general because nobody wants to bet on a losing horse – they put a horse in the race a lot of times just to see how things run.”

“COM Express is doing fine; Qseven looks like it may be viable; the others – SMARC, CoreExpress, and others – have a market share of something like a tenth of a percent,” says VDC’s Gulliksen. “Sure we could give you a huge CAGR because in the next six or seven years they might go from selling 300,000 to selling 700,000 [boards]. That’s a pretty nice CAGR, but it doesn’t mean anything.”

Consistent with Gulliksen’s findings, Toby Colquhoun, Senior Analyst, Electronics and Media, IHS Global Research in Wellingborough, UK (www.ihs.com) projects newer specifications like Micro Qseven (µQseven) growing quickly out of the gates only to obtain a “relatively small fraction of the market in the future,” while established architectures like CoreExpress will continue to serve existing customers without much further growth. Colquhoun does note, however, that boards of the System-On-Module (SOM) variety have experienced success lately, though most do not conform to specific standards.

“It’s not one “form factor” as such, and it’s certainly not a new approach, but several vendors produce off-the-shelf technology that can be grouped under the SOM definition,” says Colquhoun of IHS. “These products are typically ARM based, but there are a huge number of approaches in terms of which signals are used. This market is reasonably sized – and some suppliers in this segment have grown well in the recent past.”

In total revenue terms, IHS Global Research projects that beginning in base year 2012, the 1.4 billion USD market for PICMG 1.x, COMs, and standalone boards will grow 9 percent year-over-year through 2017, Colquhoun says. “In unit terms, the market is projected to grow, on average, at a rate of 14 percent over the same period,” he adds (Figure 2).

Figure 2: IHS Global Research projects that the market for PICMG 1.x, COMs, and standalone boards will grow in revenue at a 9 percent CAGR between 2012 and 2017, with unit shipments rising at a 14 percent clip over the same time frame. Metrics courtesy of IHS Global Research (www.ihs.com).

(Click graphic to zoom by 1.9x)

ARM makes inroads in embedded SFFs

Though SFF standards have historically been based on x86 processors, ARM’s evolution out of the mobile device space is beginning to have an impact on the embedded market, including merchant boards. Indicators from VDC Research show ARM processors making “substantial inroads against the conventional x86 architecture,” with broadening IP and lower power functioning as key drivers.

“We don’t have an interview with a vendor in the board market where they are not asking us questions about ARM,” says Chris Rommel, Vice President, VDC Research. “That is one of the things they are getting the most questions about themselves, so there are certainly the underpinnings for a rapid shift going forward, especially given some of the investments ARM has made in extending its own portfolio of IP. So you will begin to see more broadly within a lot of these smaller form factors a larger penetration of ARM.”

“This growth is largely driven by technology changes,” says IHS’ Colquhoun. “For example, ARM microprocessors lacked some interfaces that are essential for the embedded world – it was only possible to get these interfaces via a bridge chip, which mitigated the space-saving and power-saving benefits of using ARM in the first place. This has changed. High competition for design-ins for tablets and smartphones drove ARM licensees to create very capable products, which are incidentally suitable for the embedded applications as well.

“Due to the investment in software needed to make these projects viable, most ARM technology will be used in COM form factors, as this form factor is economic at relatively high volumes compared to other merchant market standards,” Colquhoun continues. “Of the total COM market in 2012, about 44 percent of components sold were ARM-based in terms of units shipped. The revenue picture is a little different obviously as x86 products are lower volume/higher value.” IHS projects a 20 percent CAGR for the ARM COM market between 2012 and 2017, as well as a big impact from AMD’s x86-based G-Series Systems-on-Chip (SoCs) in 2014, Colquhoun adds.

Beyond size and power benefits, ARM processors are making headway in embedded applications because of their compatibility with traditionally mobile Operating Systems (OSs). Particularly as a growing portion of engineering organizations begin to investigate alternatives to Windows, ARM’s track record with platforms like Android will increase in importance, says VDC’s Rommel.

“Another force pulling ARM into the ecosystem is the increasing interest in Android as the primary OS in a number of embedded device classes,” says Rommel. “And given the longer and deeper history of Android as an OS for ARM-based processors, it creates some additional pull for that semiconductor base in the embedded market as well.

“A survey that we do every year out of our embedded software practice has consistently shown growth in the percentage of engineers saying current projects and future projects are based on ARM, to the point where now one-third of engineers are saying as such,” Rommel continues. “Many of those aren’t going to be using these traditional deeply embedded, highly ruggedized boards or SFF systems; they are going to be using just an SoC, depending upon the device. But when we look at some of the trending there, we’re seeing ARM going into a range of new device classes – everything from enterprise-class servers, but also infotainment and medical devices. In many cases, the reason for selection of ARM for mobile devices is now becoming more germane to some of these traditional embedded device classes: like MIPS per watt performance. There are a lot of OEMs looking for things that just have a lower power profile.”

It is also important to note that data from VDC Research shows minimal penetration of SoCs into the merchant board market on the order of 2 percent.

Software and services still key amidst SFF trend

As Moore’s Law continues advancing to enable more with less, the SFF board industry should remain secure for the foreseeable future. Meanwhile, the emphasis on software will continue to increase in importance as additional functionality can be abstracted from physical components.

“[The SFF board market] is a larger growth area: you look at a lot of these markets and they are not necessarily garnering incredibly high growth rates,” says Rommel of VDC. “There are things that are shrinking and things that are growing, but one thing those more myopic forecasts also don’t necessarily incorporate – if you look at the embedded market holistically beyond just some of the merchant boards – is the growing value and investment in a lot of the enabling technologies in software and middleware and additional services. The investment in those technologies is growing at a faster rate than just the more bare-bones hardware by itself.”